Monday, June 24, 2013

OnGuardOnline.gov is the federal government’s website to help you be safe, secure and responsible online. The Federal Trade Commission manages it in partnership with multiple federal agencies. It is full of articles, video clips, and games. It is designed for parents, students, and teachers.

I love game-based learning because my students do, so my favorite part of the site is the Video and Media section which has thirteen short and engaging games introducing digital safety.

Monday, June 17, 2013

Our country has long prided itself on the idea that everyone
gets a fair shot at the American dream. For the Class of 2013, this may not
have been a reality. The quality of the education they received may have in
large part been determined by the zip code they were born into, partially
explaining why economic
mobility in the United States is worse than most advanced economies
throughout the world.

The inequality
gap has also greatly widened for the world they are transitioning into. Inequality
and mobility
problems are complex and require a broad range of solutions. However, research correlates financial
knowledge and wealth inequality, yet due to legislative failure in 46
states we have failed to adequately equip them with one common sense
solution, a financial education.

So while they have attended school through a time when our public
education system has had it’s funding gutted, European nations have made a
dedicated effort to improve financial education. A matter of fact, financial
literacy has now been added to the PISA.

There are a number of consequences of failing to provide a
financial education, including our failure to equip students with basic
knowledge to help them grapple with the postsecondary process.

Up
to fifteen percent of students have chosen not to attend any kind of postsecondary
program, even though they have been accepted into one. This is costly as high
school graduates with associate’s degrees earn about 25 percent more than other
high school graduates, and those with bachelor’s degrees earn over 50 percent
more.

“Many of the students most in need
of financial aid are also some of the least likely to take advantage of the
options available to them. Even though students with more grant aid and smaller
loan burdens tend to persist at higher rates, one in four low-income students
who qualify for Pell grants do not even apply for federal aid.”

So as the student debt bubble has grown to one trillion dollars,
guidance departments are overwhelmed and understaffed with students who have
never taken a basic personal finance course that introduces resources such as
the CFPB’s Paying
For College. Most students may not understand the maximum amount of student
debt to take on, or that student debt is not dischargeable in bankruptcy. Yet
we are expecting teenagers to make one of the most important financial
decisions of their lives and have failed to provide them with the preparation
they deserve to make wise and informed choices.

Dan Kadlec recently reported that Caroline Ratcliffe of the
Urban Institute explained to the Federal Financial Literacy and Education
Commission that educating students about student debt choices should be a
priority, and added:

“But teaching financial literacy at
younger ages is also critical. The earlier in life a person begins to build
wealth, the more time those assets have to compound and become more valuable.
So the key is to teach more people to make sound financial decisions earlier in
life.”

The long-term impact of excessive student debt will impact
many aspects of their lives in years to come. As the Federal Reserve recently
reported, excessive student debt is coalescing into a financial anchor for
current borrowers who want to move forward to purchase cars and homes.

We haven’t just failed preparing them for the postsecondary
process, but to make practical financial choices. The FINRA
survey released last week quantified many of the consequences of failing to
provide students with an adequate financial education. What is particularly
alarming is how little recent graduates save, as the consequences of inadequate
emergency funds often lead to consumers using high interest credit products.

“Among those in the 18-29 age
group, only 31 percent had set aside rainy day funds, while only 26 percent of
those with annual incomes below $25,000 had such funds. As a result, many
individuals and families would not be able to draw on personal financial
resources if they were faced with an economic shock.”

Meanwhile banks are making a fortune from of our financial
ignorance. The CFPB just
reported that in 2011 the banking industry earned $12.6 billion in bank
fees such as overdrafts and penalties.

For the Class of 2013, our legislative failure impacted the
matriculation to postsecondary programs, their capability to comparison shop
postsecondary financial offers, and understand the consequences of too much
student debt. Most have never been exposed to the value of and knowhow to make
basic personal finance choices such as starting an emergency savings account,
investing for retirement, and building their credit scores early in their
lives.

So it looks like most from the Class of 2013 from 46
states will be learning these lessons from the school of hard knocks. Unfortunately,
it will not be as easy to get up from the costly financial lessons they are
about to learn as it used to be.

About Me

My wife and I are raising our three children and dog in Kenwood, Ohio. I am a teacher and outreach director deeply passionate about financial education in our schools. I enjoy sharing financial literacy resources fellow educators can incorporate into their classrooms. I have become particularly interested in behavioral finance.